THE LFS vs. the eTailer- who's really pinching LFS's?

THE LFS vs. the eTailer- who's really pinching LFS's?

Postby mpedersen » Mon Aug 18, 2008 8:54 pm

I've started this new thread after posting on this one - http://www.marinebreeder.org/phpbb/viewtopic.php?t=560

Less than a year ago, Black Ocellaris clownfish hit what I felt was a record high retail price in our local market - $99.99. Today (August 18th), their price has climbed again to a new record high, $119.99, a 20% increase in price in only 11 months.

I have to wonder how much of the losing LFS's has nothing to do with Online Competition and yet everything to do with online competition. I think in the LFS's effort to maintain the bottom line they may be asking such a premium that, especially in a tight economy, people may not be able to justify.

I think the internet is making consumers more savy...i.e. I can research from the comfort of my own home and price out Black Ocellaris. We, the individual hobbyist, with so many available options, might be voting with out dollars in ways that harm the LFS, but it's coming to the point where even I no longer feel guilty about shopping on price, especially when the premium to shop locally might START at paying twice as much for a product?!

Frankly, I can go to http://www.saltwaterfish.com/site_11_03 ... arent_id=4 and purchase SEVEN Black Ocellaris for the LESS that 2 would cost me at Living Sea and have them delivered directly to my door (saving gas and time) AND I get a 15-day survival guarantee as well (vs. ZERO from my LFS without a water sample)! Heck, if I simply want a pair, $100.97 to my door from SWF.com, or $265.80 plus an hour round trip car ride.

I understand shops need to cover their bottom lines, and I do support my local shops wherever it makes sense. I'm all to happy to listen to local shop owners who complian about an inability to compete with online vendors. But the increasing disparity in pricing between online and local shops could be the undoing of the local fish shop as we know it....at least that's how I feel when I see things like this happening!

Thoughts?
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Postby KathyL » Mon Aug 18, 2008 10:57 pm

It's all well and good to order fish online if there is live-for-2-weeks guarantee, but frankly, when I buy a fish, I like to see it swimming around and eating before I plunk down the plastic. You can't always get that when you insist on captive raised fish, though. I'll have to buy online if I want captive bred banggai's for instance.

I support the local store when it comes to live stuff. I also buy frozen food and salt at whichever LFS has it cheapest. I can safely say that I've not bought more than airline tubing, as far as hardware goes, from the locals. Online is so much cheaper, yet the stores I talk to say that they make more money in drygoods than they do in livegoods....not from me. I am, I suppose, too frugal. But it is not good business for me to spend that much. I suppose if the LFS goes out of business, I won't have a customer, but I don't buy that much hardware anyway. I spend a lot at HOme Depot and Lowe's lately.
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Postby William » Tue Aug 19, 2008 9:47 am

I think much of the problem is that many fish stores are run by fish hobbyists rather than businessmen. They are very friendly and love to talk about fish. But too often they are often poorly run/managed, which increases their expenses which then increases the final price.

That said, the business model of a LFS is very different than that of an online shop. Many LFS customers are, beginners, old, maintenance clients, got-my-first-tank-from-you-and-would-never-shop-anywhere-else, or just stupid. All of these groups are unlikely to comparison shop (especially online) and willing to pay way to much for both products and livestock.

It would be dumb to not charge high prices if most of your customers are willing to pay it...So you loose a few of the smarter, more knowledgeable, tech-friendly customers, but you make 2x as much profit on the ones you don't loose.

However the markets seem to be changing. Around here many of the higher-priced shops who target beginners and maintenance clients are either downsizing or closing all together. At the same time, lower priced shops targeting more advanced/more established hobbyists are popping up all over the place (though only time will tell if they last either).
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Postby aquagrrl » Sat Aug 23, 2008 2:25 am

I am happy to pay a reasonable amount more to get my fish locally. I like being able to see my fish in a lot of cases, and it saves you from the nasty DOAs, that even if guaranteed are really a pain to deal with.

However, LFS's have other problems. I said reasonable amount more, not 2x, 3x and sometimes 4x more than I'd pay online. Yet many local stores here do. However, as many more charge a reasonable markup, so there has to be something they're doing different. Not only that, but many of the overpriced stores have crappy selection that sits forever. Meanwhile, lower priced shops may be smaller with less fish but the turn over is higher, and I can be assured that when I come in next week, they will probably have something new I'm interested in.

Its not just the livestock either. I'd prefer to buy my equipment where I can support my local stores. However, when you want $90 for a 36" power compact light, no, I'm sorry, I can't justify that. Especially when I can drive up the road to a chain pet store and get it for half that. And at that point I'm not getting anything out of it, so to heck with it, I'm ordering online.

It also doesn't help that most store in my area carry the same things for dry goods. Probably the same things that the couple of local distributors carry. Anything more "exotic" I have to order online. Even if its very commonplace in the hobby. Only two stores which are a considerable drive seem to pay attention to the changing patterns of the hobby and try to stock items that are newer or not the "standard" brand. Many brick and mortars are shooting themselves in the foot by not having variety and forcing their customers to order online. And well, once I've started because I need a certain product, I might as well order a few other items I need. I know LFS's don't have warehouses of space available to them, but come on, I can get Kent anywhere. That may have been fine when there wasn't a vast reservoir of info about different products available to the everyman, but now there is.

I'm sure there is some legitimate concerns about etailers putting brick and mortars out of business. However, it seems to me that the biggest concern should be themselves. This especially holds true of older, established stores that are set in their ways. If they're not going to try to change to respond to the changing times, then next generation that is more comfortable online will force their hand, either to change, or as I suspect, to close.
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Postby soonerseahorse » Sat Jan 03, 2009 8:48 am

I choose to do business with the lfs by seeing what they are willing to do for me and i for them. I recently purchased a pallet of io from a store willing to make me a decent price. I work with several stores that way, i food, etc and when they cannot work with me on an item they will tell me. One item was reed mariculture. I feed tons of arctic copepods to my seahorse babys and wanted several large bottles. Also some nanno and some other things. I thought if they placed a substantial order they might get a discount on their product and i would not have to pay shipping. Just their standard markup. They told me they could not get me any better price than for me to have it shipped in. Yet he worked with me on the io price. I told him what i was paying for it and he made me a better deal.
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Postby soonerseahorse » Sat Jan 03, 2009 8:55 am

But i think he is a good business man. He owns several business that we use but loves his pet store.
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Postby Aquanut » Mon Jan 05, 2009 6:20 pm

Mpederson, My thought-If all you are looking for is the lowest price B&W clown, and if everyone felt the same way, then eventually the lfs would have to lower their price, stop trying to compete, or go out of business. Then, when you have driven out all the lfs, you will start buying online from the lowest price dealer, and to what end? Are you trying to race to the bottom? That's the problem with many Yanks these days, and why the US of A is spiraling down. Many Americans don't want to pay their own countrymen to produce farm raised fish, they go to Wal-Mart to get the lowest price. And what are they getting? Fish farmed in China or Indonesia where their regulations are not as strict, and many farms still use chemicals that are known to cause cancer. Yeah, Yanks line up to happily pay 50 cents less a pound so they can feed their kids God knows what. MP, I'm surprised to read you post something like this. Hey, I think the Phillipines has the lowest price on dynamite corals and cyanide clowns, lets all support the online guy with the lowest price (guess where he gets his clowns?), and put all the ornamental fish breeders out of business. God knows it is much cheaper to blast the little fishes out of the water that raise them in a tank for four months!
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Postby mpedersen » Tue Jan 06, 2009 1:33 pm

Aquanut, perhaps you should re-read my initial post. Keep things in context. Let me remind you:

mpedersen wrote:Black Ocellaris clownfish hit...a record high retail price in our local market - $99.99. Today...their price has climbed again to...$119.99, a 20% increase in price in only 11 months.


And to paraphrase, the rest of that I could get a pair online for $101.00 with a 2 week guarantee, or pay $265 for the same without a guarantee from my LFS.

But perhaps the crux, and something I didn't bother to mention, is that these fish likely come from the same breeders (they're ALL CB, WC Black Ocellaris just don't come into the hobbyt). It is highly likely that both retaiilers (one online, one Brick and Mortar) are paying the same price for those fish. So why is one $35 and the other $120?!

So it's not a question of the supply as you try to frame it, it is 100% a question of how things are being retailed. Let's be realistic here...is the notion of supporting a LFS worth paying almost 3 times as much to you? If so, at what point is the "LFS price premium" no longer worth it? 6 times the price? 8 times? 10 times?

What I saw happening back in August was that in effort to maintain their businesses, local shops are charging a premium for being a local shop. Which is fine, up to a given point - I do understand that there are certainly benefits to shopping locally. However, for me, when I consider the cost of a CB Black O Pair, shipped to my door at $101, vs. $265 for the exact same thing (oh, and again, 2 week guarantee vs. none), I can't justify paying a $164 premium just to support my local store. To do so would be fiscally irresponsible to my family. Heck, that's my summer electric bill for a month.

Thus my concern for the local shops overall - this example (and other examples I've seen) leads me to worry that especially in these difficult times, LFSs could be pricing themselves right out of existence.

That's not to say that ALL shops behave in this manner...i.e. currently one of our area LFS's is bringing in fish like Bellus Angelfish and retailing them for $45 a shot...(a $200-$300 fish at another area shop). $45 - that's like half of the cheapest you'd find online. So clearly, some shops ARE finding ways to lower prices and compete...and seeing $45 Bellus angels only makes me want to set up that 90 gallon in the basement just so I can go out and get a trio!

So again, I am not advocating for or against local shops. I am simply expressing concern that some shops are going to price themselves right out of existence. I don't personally think they can continue to put their heads in the sand, raise their prices to counteract falling sales, and ignore online suppliers...they're going to have to find effective ways to compete.
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Postby Miles » Tue Jan 06, 2009 5:14 pm

That shop deserves to go out of business if they think they can charge that much of a premium on a $15 ORA fish. But they set their own prices, based on what their clientel will pay. One of my LFS sells my Os for $22.50, the other for $18. And the higher priced store sells more every month than the cheaper one. I support my LFS as much as possible, and one owner rewards me with 'at cost' supplies much of the time. But I reward him with healthy fish, and profitable live foods. And I pay him full price if it is for my reef tank, and not business related. They are all aware that the internet is a great resource to get small, high dollar items. But try and get a 90 gal tank, stand, hood, lights, sump, sand, and rocks all SHIPPED TO YOU from online sources. You'll pay double than most LFS. They have to play on even ground. Charge enough to make money, but not to much to drive customers online. But I've bought many items at the LFS that was the same price if not cheaper than online... and no shipping costs. Just support your LFS that is fair and they will stay in business.
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Postby Clownfish75 » Tue Jan 06, 2009 5:49 pm

If yuo even consider ever wanting to sell a reaosnable amount of fish you need to support the LFS, I dont think most people will breed enough to supply a big online place, so its left to ORA or the like, this doesnt help the small breeder, who needs those LFS to survive.

Is it MOFIBS place to try to help this, yes it is, its in our interest to hav as many stores as possible, if a store wants ot charge the earth, then so be it, if they can sell them half their luck, I suspect the store selling for half the price down the road is more of a worry to them anyway.

My point is that supporting your LFS irrespective of the price is important, perhaps you will shop at a better store, but support the locals and they will support you.

For me i spent many years in the industry in aquarium retail, in a large city far from where i now breed fish, but this knowledge and plenty of the contacts i have from those days 15 years ago, still help me sell fish today, Today i basically buy 90% of my stuff wholesale direct but i spent mega bucks to get that right, and that last 10% i buy from a local store at cost anyway, but having said that i could ring 10 people in the next 1/2 hour (all customers) and get the same price no problems. Its all a ill scratch your back you scratch mine.

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Postby Aquanut » Tue Jan 06, 2009 6:22 pm

mpedersen wrote:
Black Ocellaris clownfish hit...a record high retail price in our local market - $99.99. Today...their price has climbed again to...$119.99, a 20% increase in price in only 11 months.
I'm not sure what you want me to keep in context, a lfs in the boonies of Illinois has to pay how much more fuel (shipping) cost in % than 11 months ago?

And not all hatcheries or suppliers charge their customers the same price. I know for a fact once you start spending a million or more at some wholesalers they pull out a new price sheet you never knew they had. And the supply isssue is the same. You think any pet shop can call up ORA and say they want 10 pairs of Picasso clowns and 40 B & W Ocellaris, that's it. Their are different tiers of pricing, maybe ORA doesn't do it, but many do. And which lfs is going to get picasso clowns and B& W O's, the one that does a large volume of business on a regular basis.

You are lucky, you have a choice, you can buy online (cheaply) or actually see the fish before you buy it at a lfs. But remember, the lfs owner has to put up with the "no not that one, the other one, no the one with only half a stripe in the middle, not that one, that one has a rip in its fin".

Yes I know you are talking about B & W O's and tank raised fish, my extension was to imply if everyone is looking for the lowest price, then the future of captive bred marine ornamentals is not as bright as many would hope. And it seems that MOFIB would have the interest of breeders in mind. The only reason that the price of B & W O's is high is because there IS NO CHEAP WILD SOURCE. What is a fair price, and how much is something worth? Well in a free market, something is worth what somebody is willing to pay for it.

You can buy a timex or a Rolex, they both tell time. Me, I want to buy my Rolex from a local that I know and trust, not watches.com
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Postby BaboonScience » Wed Jan 07, 2009 3:54 am

Really, Miles hit it on the mark.
The LFS is the place where most of the small enterprise people go to move their product. They do not produce the quantity necessary to move product to a wholesaler or etailer.
IMO, their cooperation tantamount to the success of captive bred fish in the marketplace at this time. We need them to buy the fish and in return, they help most of us out when they can. At least that has been my experience.
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Re:

Postby Aquanut » Wed Jan 07, 2009 7:24 am

BaboonScience wrote:The LFS is the place where most of the small enterprise people go to move their product. They do not produce the quantity necessary to move product to a wholesaler or etailer.
IMO, their cooperation tantamount to the success of captive bred fish in the marketplace at this time. Dr. John

I agree.
Mpederson, I do know what your point was. But as a breeder- wholesaler, I can not dictate what my customers charge. They determine their mark-up. For my part, I help on their bottom line because my fish live in their tanks, and in their customers tanks.
Also, I don't have a beef with online stores. However, I do believe that far too many Americans shop for cheap, not value. In the case of marine ornamentals that usually means WC not tank raised. MOFIB members need to emphasize the value of captive bred fish, and why they are worth five times more at retail (MP, I know I'm preaching to the choir-since this is why you started MOFIB-No?)
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Postby Greshamh » Fri Jan 09, 2009 4:11 am

I stopped reading your post Matt when you compared a pricey store IMO to a cheap online store. Living Sea isn't exactly a low ball store now ;)
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Re:

Postby Greshamh » Fri Jan 09, 2009 4:20 am

Miles wrote:That shop deserves to go out of business if they think they can charge that much of a premium on a $15 ORA fish.


Pretty harsh thing to say about a business. Saying the deserve to go out of business because they choose to sell something for a price you don't think they should isn't very cool in my book. To each their own. Why judge and cast such negativity on a successful aquarium store? Pick up any good us based reef aquarium book and check the photo credits. Most will have rare fish pictures from that store :) Mike chooses to sell fish at the price he sees fit. Wouldn't you as a breeder commend him for creating a higher market price for them? It gives you leverage to charge more ;) Or would you like to see him blow them out at $20 bucks and have more probably die as heck, another $20 will get you another. You wouldn't have that same thought IMO with a $110 one.
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Postby Miles » Fri Jan 09, 2009 10:50 am

Ok... Maybe a little harsh :oops: But If they are that big, a 750% markup is a bit high. And they are only driving up the retail price... I'm sure the wholesale cost will continue to drop. I hate seeing stores go under, but you have to have resonable prices on comperable products to keep my business. I have a store 4 miles from me that I don't buy anything form or sell to due to their huge markup on fish and supplies. $75 for a bucket of IO or $40 for an empty 10 gal aquarium is a bit rediculous. So I drive 25 miles to the next closest store. BTW... IA still rocks :)
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Postby BaboonScience » Sun Jan 11, 2009 1:25 pm

Then again, things are tough all over. Niche markets are one way to go.
But today, to quote a once popular song. "And another one bites the dust"
http://www.marinedepotlive.com/

As I said, times are tough.
Wonder where their livestock went.
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Postby tcmfish » Sun Jan 11, 2009 2:19 pm

After working at a store with a high mark up, it proved to me people will pay any price. Most people coming into our store don't go on forums, they get all their info from the LFS and they don't know how much the fish is supposed to cost. They come in, someone sets them up with a setup and they buy whatever that person says is compatible.

Sure us hardcore hobbyists want a lower price, but as Gresham said if they have a high price it allows you to charge more and still have a lower price.

Also LFS can have a lot of DOA and they have to feed the fish and most hold the fish longer than an online retailed which moves things as soon as they are for sale. Take a look at liveaquaria, they put up their Liopropoma carmabi for sale gone that night! If a store gets those in I don't think they would go that fast. An online store's customer base spans the nation not a city or town.

I don't have a big problem with the LFS charging more, most of you are saying Living Sea is trying to go out of business, when really they have been around for a while and seem to have their area figured out. I don't mind ordering online because with the guarantee and price I think its great. And as mentioned earlier the LFS will always have those tanks.

I only have experience with Liveaquaria and the one fish I ordered that died within the guarantee was credited right away no questions asked no pictures, which I think is crazy but great. The others were eating right out of the bag which included a potters angel and fairy wrasse, and I've heard many similar stories from them and their customer service, second to none.
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Re:

Postby mpedersen » Sun Jan 11, 2009 2:36 pm

Greshamh wrote:I stopped reading your post Matt when you compared a pricey store IMO to a cheap online store. Living Sea isn't exactly a low ball store now ;)


But Gresh, that's not the point...I'm taking in the "big picture", the whole market. I've purchased fish from both places. I understand that they ARE very different retail outlets. But, as I laid it out, I believe that I would get a comparable product if I purchased a Black Ocellaris from either retailer.

The difference also doesn't change the fact that the average price online for a Black Ocellaris at any size was around $44 in 2008.
(see http://www.marinebreeder.org/phpbb/viewtopic.php?t=2829 & http://www.marinebreeder.org/phpbb/viewtopic.php?t=1738). The last time I surveyed my local shops - $69 was the average for the same fish (and in this one instance, we KNOW it's the same because virtually all Black O's we see offered for sale are captive bred). I'm not discounting that the $44 average price does not include shipping costs to the destination, whereas to a large extent, a $69 local fish does. But that's still far cry from $120 each. As I laid out in my example, even when shipping and taxes are thrown into the mix, the LFS premium approaches 62% of the total purchase price to buy a pair locally vs the same online. The price, shipped to my door, is just over $50 a fish in my example, vs. $133 (and that still doesn't acount for my gas and travel time).

Living Sea is not the only shop to charge "more" for Black Ocellaris - several others in the area do, often in the $70-$80 range for this particular varient. But others, even high end shops like Old Town (every bit as "high end" as Living Sea), ask $40-$50 a shot. If Old Town can ask $50 and Living Sea in the same time period for the same fish is asking $120, clearly there's a huge discrepency in price, and to the outsider, there's nothing to justify it.

Thus I have to ask the question - does there come a point when some local shops are simply pricing themselves right out of the market? Perhaps when we hear shops complaining about online retail and how it's hurting their business, I think the shops must also consider their own actions and policies. That's all I ever meant when I saw Black Ocellaris at $120 each. We don't know why Living Sea is asking $120 for the fish. Are they just trying to see what the market will bear? They were the last in the area to drop the price on Blue Spotted Jaws from $300 each to the $150 range. Is it perhaps that Living Sea is simply "behind the curve", out of touch with the market when it comes to pricing fish and coral? I don't know, and I didn't intend to make Living Sea the topic of this discussion - I've purchased several fish from them. Living Sea in this discussion simply presented the most flagrant example of what I see happening in general with the LFS's...as demand slows, they're raising margins to offset slower sales. How does that EVER help?!

And that's really the other point when I made it. I'm all for supporting local shops, but when asking such a high premium to support their existence, there comes a point when they might not deserve my support, thus again, when they view the "hobbyist" as an adversary, you have to wonder who is really at fault for that point of view. I certainly, in good concious, could never justify paying $120 each for Black Ocellaris no matter how much I want to see my local store remain. I can't justify that level of premium to simply go into the store to see the fish swimming around. And with the advent of WYSIWYG features, the Online Retailers are chipping away at that LFS advantage too.

I believe since I originally started this post (August of 2008), Living Sea had come down from their $120 price point to I think $99.99 last time they had them, and I know that in year's past they've been as low as the $80 range.

So again, my stance is best summed up that I'm concerned for the LFS's out there, and I was concerned when I originally posted the observation. I'm worried that at least some of them are trying to play the blame game, pointing the finger at everone else, instead of trying to reevaluate their business models to adapt and compete.

FWIW,

Matt
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Re:

Postby mpedersen » Sun Jan 11, 2009 2:40 pm

BaboonScience wrote: "And another one bites the dust"
http://www.marinedepotlive.com/


I've been doing a new clown survey of online etailers just to do some mindless work for a change...I'm through the first 40 on my list, and 8 are closed or no longer selling livestock.
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Postby tcmfish » Sun Jan 11, 2009 8:35 pm

The store I work at when home is Aquarium Adventure in Bolingbrook and they have a regular price and a fish club price which is 25% cheaper, and over the summer black o's were $99.99 regularly. I don't think I ever sold one. And we don't normally stock them anymore now.

We have also had pearly jawfish for $60. IMO, when you can order a single fish plus pay for the shipping and it still be cheaper than the LFS it is crazy. I can understand a LFS being more expensive than an online retailer, because of the volume of fish each carries, but for picking up one or two fish I think it should be cheaper at the LFS not online.

I agree with Matt, there are other stores in the area that don't charge that much and they do fine, so even if Living Sea is not a low ball store, what makes me want to shop there?
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Re:

Postby aomont » Sun Jan 11, 2009 9:01 pm

mpedersen wrote:Are they just trying to see what the market will bear? They were the last in the area to drop the price on Blue Spotted Jaws from $300 each to the $150 range. Is it perhaps that Living Sea is simply "behind the curve", out of touch with the market when it comes to pricing fish and coral?


Maybe they were also the last one to feel the sales drop on blue spotted jaws... Although we look for a "fair" price when we buy fish and try to ask a "fair" price when we sell them. The first "fair" reffers to the value of what is being bought and the second "fair" to value of what´s being sold + marketing capability + possible profit to be gained (short/long term).

Those two "fairs" are soooo variable and as long as you´re asking a "fair" $300 and there´s enough people also accepting them as "fair" to make you the profit you want, why should you hurry to make them $150 ?

I don´t feel individual prices tags alone are not the only reason some stores (LFS or E-tailers) are getting out of the market.
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Postby Aquanut » Fri Jan 16, 2009 9:02 am

You may also ask the question the other way. Are online e-tailers pricing themselves out of business by charging too little to compete amongst themselves so that there margin is razer thin and they are on the verge of going under?

"I've been doing a new clown survey of online etailers just to do some mindless work for a change...I'm through the first 40 on my list, and 8 are closed or no longer selling livestock."
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Postby xroads » Fri Jan 16, 2009 9:58 am

I think the LFS need to adapt or they will become extinct. I dont believe that the LFS need to be lower then online. But they need to be at least competitive. When I can order B&W from LA for $50 with a 15 guarantee vs my LFS for $150 with a guarantee until you hit the door, there is a problem.

I believe one area the etailers smoke the LFS is service. When I call Drs, LA, or MD, I cannot believe the incredible service I get. When I have a problem with something I bought from a LFS I get the "you must have something wrong with your water" response or "you must of hooked it up wrong".

The other problem I see with LFS is the level or presentatin. When I goto a LFS & I see more then 1 dead fish, caulurpa in the tanks, algae of the glass, spots on the fish, it doesnt persuade me to pay a higher premium for live stock.

Our LFS raises his own black clowns in the store and sells them for $150 at about an inch or so.
xroads
 
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Joined: Mon Dec 10, 2007 1:35 pm

Postby percula lover » Wed Jan 28, 2009 2:06 am

:shock: $120 dollars for a B&W occs. I just laugh thinking about it :lol:

I got minen from morgman for $35 dollars :lol: :lol: :lol: $120 dollars for a B&W occs. :lol:
Patrick
percula lover
 
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